When should I serve a notice to complete?

If you have ever been in the unfortunate position of a delayed completion, you will have to consider whether it is advisable to serve a notice to complete. Each case will depend on its own circumstances. It is important to know the effect of serving a notice to complete and the requirements of the Standard Conditions of Sale (SCS) and National Conveyancing Protocol (NCP) before doing so.

The notice to complete will have the effect of making time of the essence in relation to the contract so that, if completion does not take place on the new completion date, then the non-defaulting party may terminate the contract forthwith, forfeit or recover the deposit and commence an action for damages to recover loss.

Condition 6.8 of the SCS (fifth edition) deals with the notice to complete. Following the revision of the SCS to the fifth edition, it is now only possible to serve a notice to complete after the time specified in the contract at condition 6.1.2. This change prevents the seller from serving a notice to complete on the morning of the completion date. Completion is due to take place ten working days from service of the notice (excluding the day on which the notice is given) which differs from the common law position which only requires a 'reasonable time'. Following service of the notice, time is of the essence of the contract and, once served, it cannot be withdrawn.

It is important to remember that serving a notice to complete binds both parties. In particular because the party serving the notice must be ready, able and willing to complete. Therefore, should events occur between service of the notice and the new date for completion resulting in the non-defaulting party being unable to complete, then the previously defaulting party could terminate the contract leaving the other in breach of contract. For this reason perhaps more than others, it is important never to use a notice to complete as a threat.

Communication and negotiation

The NCP does not give guidance with regards to service of a notice to complete. However, it does state that, in the event of a delayed completion, the solicitors for both parties should communicate and agree how matters will be handled until completion has taken place. The emphasis is on communication and negotiation.

Consideration should be given to why the delay has happened and what is being done to remedy the situation in order for completion to take place. I like to think that where completion may be delayed by no more than a day (and there is a reasonable explanation as to why) then there is no need to serve a notice to complete. However, if there is a lack of information from the other solicitor or there is some reason why completion may be delayed for any longer period of time, the service of a notice to complete should be seriously considered in order to secure your own client's position.

Also remember that there are other provisions in the contract to deal with delays on completion. The most used remedy is probably the right to compensation for delay, which will include interest at the contract rate and, further, compensation for loss incurred. For example, a delayed completion may result in an additional day's interest on the mortgage redemption. This should be paid by the defaulting party.

Completion must include clear communication between the two solicitors (subject to the client's confidentiality) to minimise disruption and to try and resolve any issues as quickly and as smoothly as possible.